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Unformatted text preview: cial statements, and
(b) a restriction on the firm’s ability to provide the services would result in significant
difficulties for the client (for example, as might result from a failure to meet regulatory
reporting requirements). In such situations, the following conditions shall be met:
(a) Those who provide the services are not members of the audit team; (b) The services are provided for only a short period of time and are not expected to recur;
and (c) The situation is discussed with those charged with governance. Valuation Services
188 290.175 A valuation comprises the making of assumptions with regard to future developments, the
application of appropriate methodologies and techniques, and the combination of both to
compute a certain value, or range of values, for an asset, a liability or for a business as a whole.
290.176 Performing valuation services for an audit client may create a self-review threat. The existence
and significance of any threat will depend on factors such as:
• Whether the valuation will have a material effect on the financial statements. • The extent of the client’s involvement in determining and approving the valuation
methodology and other significant matters of judgment. • The availability of established methodologies and professional guidelines. • For valuations involving standard or established methodologies, the degree of subjectivity
inherent in the item. • The reliability and extent of the underlying data. • The degree of dependence on future events of a nature that could create significant
volatility inherent in the amounts involved. • The extent and clarity of the disclosures in the financial statements. The significance of any threat created shall be evaluated and safeguards applied when
necessary to eliminate the threat or reduce it to an acceptable level. Examples of such
• Having a professional who was not involved in providing the valuation service review the
audit or valuation work performed; or...
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- Spring '14